Cash flow
AP aging report, for paying on purpose.
What you owe, when it is due, and which bills have an early-payment discount worth taking.
What you owe, when it is due, and which bills have an early-payment discount worth taking.
Free download
Accounts payable aging report
Excel (.xlsx) · 2 tabs · no email required
What is in the file
Accounts payable aging is the mirror image of receivables: what you owe, to whom, and how overdue it is. It gets far less attention than AR, which is a mistake, because payables are the only part of your working capital you control unilaterally. How to read an AP aging report goes deeper on DPO, the discount arithmetic and supplier finance.
There is a real difference between paying on day 30 of net 30 rather than day 5, and paying on day 52. The first extends your cash cycle at no cost. The second costs you supplier goodwill, priority when something is scarce, and eventually credit terms.
The aging report makes the distinction visible. Anything sitting past its terms is the second kind, whatever the intention was when the bill arrived.
A vendor offering 2/10 net 30 is offering a 2 percent discount for paying on day 10 rather than day 30. That is 2 percent for twenty days of money, which annualises to roughly 37 percent.
Unless your cash is genuinely scarce, that is one of the highest returns available to a company of this size. The template calculates the annualised rate on each bill so the comparison is explicit rather than intuitive.
| Terms | Discount | Days gained by not paying early | Annualised cost of skipping it |
|---|---|---|---|
| 2/10 net 30 | 2% | 20 | ~37% |
| 1/10 net 30 | 1% | 20 | ~18% |
| 2/10 net 60 | 2% | 50 | ~15% |
DPO is payables divided by cost of goods sold, times days in the period. Rising DPO lengthens your cash conversion cycle, which is good for cash — up to the point where it means you are late, at which point it is a solvency signal rather than a working-capital one.
DPO on its own says very little. DPO of 45 against a DSO of 30 means your suppliers are funding you. DPO of 45 against a DSO of 75 means you are stretching suppliers because customers are stretching you, and the underlying problem is in collections.
Bills sitting in the 31–60 bucket are usually not a cash decision at all — they are a bill nobody approved because the approver was travelling, or an invoice that went to a personal inbox. A payables process where every bill has a named approver and a deadline removes most of that bucket without any change to how much cash you hold.